NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
Scientific Energy, Inc., (the "Company") was incorporated under the laws of the State of Utah on May 30, 2001. Prior to August 2011, the Company was principally devoted to the buying and selling of various types and grades of graphite, such as medium- and high-carbon graphite, high-purity graphite, micro-powder graphite and expandable graphite. In August 2011, the Company decided to engage in a business of e-commerce platform. Currently the Company is in the process of developing a website, which provides an e-commerce platform, where registered members can exchange goods and services.
On March 28, 2006, the Company set up a wholly owned subsidiary, PDI Global Limited (“PDI”), which was incorporated in the British Virgin Islands in order to engage in a business of e-commerce platform.
In January 2008, the Company entered into a joint venture agreement with China Resources Development Group Ltd., a Hong Kong company. Under the agreement, a joint venture company, Kabond Investments Ltd (the “JVC”), was established in Hong Kong, and the Company invested $39.6 million Hong Kong dollars (approximately $5.09 million) into the JVC for 72% of the JVC’s capital shares, and China Resources Development Group Ltd., jointly with its partner, invested $15.4 million Hong Kong dollars (approximately $1.98 million) into the JVC to receive 28% of the JVC’s capital shares. In December 2008, all equity interest of the JVC owned by the Company was sold to a third party for $39.6 million Hong Kong dollars (approximately $5,109,743).
In January 2009, the Company through its wholly-owned subsidiary, PDI, entered into a joint venture agreement with China Resources Development Group Ltd. Under the agreement, the Company agreed to invest $43,040,000 Hong Kong dollars (approximately $5.55 million) into a joint venture company Sinoforte Ltd. in Hong Kong (“Sinoforte”). The Company got 80% of Sinoforte's capital shares, and China Resources invested $10,222,000 Hong Kong dollars, approximately $1,318,967, and another investor invested $538,000 Hong Kong dollars, or approximately $69,419, into Sinoforte for 19% and 1% of Sinoforte's capital shares, respectively. The main business of Sinoforte was trading mineral products such as graphite produced in China. In June 2009 and September 2009, respectively, China Resources and the other minority investor cancelled their investments in Sinoforte, and the full amount of their original investments was returned. As a result, Sinoforte became a wholly-owned subsidiary of PDI. On December 8, 2020, PDI sold all the shares of Sinoforte to the Company at consideration of HK$10.
On February 28, 2012, the Company set up a wholly-owned subsidiary, Makeliving Ltd., which was incorporated in the Cayman Islands in order to engage in a business of e-commerce platform.
On January 23, 2018, the Company entered into an agreement with Cityhill Limited, a wholly owned subsidiary of South Sea Petroleum Holdings Limited, a Hong Kong listed public company, pursuant to which parties agreed to establish a joint venture (the “Joint Venture”). Each party owns 50% equity interest in the Joint Venture respectively.
On February 8, 2021, the Company acquired an entire share of a Hong Kong company, Qwestro Limited, for HK$1,000 without any goodwill and bargaining purchase.
On March 24, 2021, the Company disposed of its wholly-owned dormant subsidiary, PDI Global Limited, with a positive net worth of $1 to an unaffiliated third-party purchaser for $1.
In September 27, 2021, the Company completed the acquisition of 98.75% shares of Macao E-Media Development Company Limited (“MED”). As consideration for the MED shares, the Company agreed to issue the Sellers, or its assigns, in a total of 131,337,500 shares of the Company’s restricted common stock, par value $0.01 per share, at a consideration of $0.50 per share, in the aggregate consideration of $65,668,750 (the “Purchase Price”). As a result of this acquisition, MED becomes a 98.75% owned subsidiary of the Company. MED was founded at Macau in 2011. Its main area of business includes food and grocery order-pickup-delivery services from local restaurants, supermarkets and hotels.
MED has five subsidiaries, each of which is in charge of respective area such as Development & Maintenance, Marketing & Operation, Logistics & Delivery, Payment & Clearance, Emerging Market Business Development.
25
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited consolidated financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results to be expected for a full year.
The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. The management will seek to raise funds from shareholders.
The accompanying consolidated financial statements present the financial position and the results of operations of the Company and its 100% owned subsidiaries, Makeliving, Ltd. and Sinoforte Limited. Qwestro Limited, in turn, is the 100% owned subsidiary and consolidates with Sinoforte Limited.
All significant intercompany transactions and balances have been eliminated in consolidation.
Business Combinations
The Company accounts for acquisition of entities that include inputs and processes and has the ability to create outputs as business combinations. The Company allocates the purchase price of the acquisition to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and integration costs are expensed as incurred.
Revenue Recognition
The Company recognizes revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenue is recorded.
The Company defers any revenue for which the product has not been delivered or services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required.
Revenues on the sale of products, net of estimated costs of returns and allowance, are recognized at the time products are shipped to customers, legal title has passed, and all significant contractual obligations of the Company have been satisfied. Products are generally sold on open accounts under credit terms customary to the geographic region of distribution. The Company performs ongoing credit evaluations of the customers and generally does not require collateral to secure the accounts receivable.
The Company is operating mobile platform of ordering and delivery services for restaurants and supermarket in Macau, together recognizing revenue on closed transactions.
Segment information
ASC 280-10 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. All sales and substantial assets of the Company are in China and Macau. The Company applies the management approach to the identification of our reportable operating segments as provided in accordance with ASC 280-10. The information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment.
26
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Generally, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.
As of December 31, 2022, and December 31, 2021, the Company maintained $2,058,216 and $4,899,488 in foreign bank accounts not subject to FDIC coverage
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits held by banks.
Comprehensive Income (Loss)
The Company adopted Accounting Standards Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”) which establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. ASC 220-10 requires other comprehensive income (loss) to include foreign currency translation adjustments.
Foreign Currency Translation
The Company translates the foreign currency consolidated financial statements into US Dollars (“USD”) using the year or reporting period-end or average exchange rates in accordance with the requirements of Accounting Standards Codification subtopic 830-10, Foreign Currency Matters (“ASC 830-10”). Assets and liabilities of these subsidiaries were translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented.
The consolidated financial statements were presented in US Dollars except as other specified.
The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss) within stockholders’ equity (deficit). Foreign currency transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations. The exchange rates used to translate amounts in HKD and MOP into US Dollars for the purposes of preparing the consolidated financial statements were as follows:
|
| December 31, 2022
|
| December 31, 2021
|
Exchange rate on balance sheet dates
|
|
|
|
|
USD : HKD exchange rate
|
| 7.7890
|
| 7.7992
|
USD : MOP exchange rate
|
| 8.0226
|
| 8.0332
|
|
|
|
|
| Year ended December 31, 2022
|
| Year Ended December 31, 2021
|
Average exchange rate for the period
|
|
|
|
|
USD : HKD exchange rate
|
| 7.8230
|
| 7.7838
|
USD : MOP exchange rate
|
| 8.0577
|
| 8.0173
|
27
Property, plant and equipment
The estimated useful lives of property, plant and equipment are as follows:
|
| |
|
|
|
|
|
Office equipment
|
| 3-5 years
|
|
Furniture and fixtures
|
| 3-5 years
|
|
Vehicles
|
| 4 years
|
|
The Company evaluates the carrying value of items of property, plant and equipment to be held and used whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying value of an item of property, plant and equipment is considered impaired when the projected undiscounted future cash flows related to the asset are less than its carrying value. The Company measures impairment based on the amount by which the carrying value of the respective asset exceeds its fair value. Fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved.
Intangible assets
Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method based on their estimated useful lives as follows:
The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Trade receivables
Trade receivables are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on management’s assessment of potential losses based on the credit history and relationships with the customers. Management reviews its receivables on a regular basis to determine if bad debt allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable.
The Company considered the amounts of receivables in dispute and believes an allowance for these receivables were not necessary as of December 31, 2022 and 2021.
Fair Value Measurements
ASC Topic 820 defines fair value, establishes a framework for measuring fair value and enhances disclosure requirements for fair value measurements. This topic does not require any new fair value measurements. ASC Topic 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC Topic 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 —
| Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
Level 2 —
| Other inputs that is directly or indirectly observable in the marketplace.
|
|
|
|
Level 3 —
| Unobservable inputs which are supported by little or no market activity.
|
|
|
|
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Earnings (Loss) Per Share
Earnings Per Share (‘EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants.
The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company's common stock at the
28
average market price during the period. The Company has no stock options, warrants or other potentially dilutive instruments outstanding at December 31, 2022 and 2021.
Investment in Unconsolidated Joint Ventures
The Company entered into a JV agreement with an independent third party, to form a JV company. The joint venture agreement provides the Company with only the rights to the assets and obligation for the liabilities of the joint arrangement resting primarily with the JV. In adopting ASC Topic 323, Investments - Equity Method and Joint Ventures (Topic 323), the Company’s investment in joint venture is accounted for using the equity method.
Inventories
Inventories are carried at the lower of cost and net realizable value, as determined using the weighted average cost method. Management compares the cost of inventories with the net realizable value and if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost. On an ongoing basis, inventories are reviewed for potential write-down for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the estimated net realizable value based upon forecasts for future demand and market conditions. When inventories are written-down to the lower of cost or net realizable value, it is not marked up subsequently based on changes in underlying facts and circumstances.
The Company entered into a purchase agreement with JV company and through their platform to purchase of gold. In adopting ASC Topic 330, Inventory, it permits certain inventories such as precious metals, agricultural and mineral inventories to be stated above cost in exceptional cases. We believe that because our business model is to trade gold and held in short-term, market value is a more useful and relevant measurement than lower of cost or market value.
Goodwill
Goodwill is recorded as the difference between the aggregate consideration paid for in a business combination and the fair value of the acquired net tangible and intangible assets acquired. The Company evaluates goodwill for impairment on an annual basis in the fourth quarter or more frequently if indicators of impairment exist that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Based on that qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company conducts a quantitative goodwill impairment test, which involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. The Company estimates the fair value of a reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss is recorded for the difference.
Non-controlling interest
Non-controlling interests represent the equity interests in the subsidiaries that are not attributable, either directly or indirectly, to the Company.
Lease liabilities
In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. In determining the length of the lease term to its long-term lease, the Company determined it did not have an option to extend either lease.
Recent Accounting Pronouncements
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective
29
for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes ASC 326, Financial Instruments - Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This ASU clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In May 2019, the FASB issued ASU No. 2019-05, Targeted Transition Relief, which amends ASC 326. This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The Company is currently evaluating the impact this guidance will have on its financial statements. The adoption of this standard did not have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Adoption of the ASUs is on a modified retrospective basis. As the Company qualifies as a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact that the adoption of ASU 2017-04 will have on its condensed consolidated financial statement presentation or disclosures.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
NOTE 3 – GOING CONCERN
As shown in the accompanying consolidated financial statements, the Company has generated a net loss of $3,766,129 and an accumulated deficit of $14,034,905 as of December 31, 2022. The Company also experienced insufficient cash flows from operations and will be required continuous financial support from the shareholders. The Company will need to raise capital to fund its operations until it is able to generate sufficient revenue to support the future development. Moreover, the Company may be continuously raising capital through the sale of debt and equity securities.
The Company’s ability to achieve these objectives cannot be determined at this stage. If the Company is unsuccessful in its endeavors, it may be forced to cease operations. These consolidated financial statements do not include any adjustments that might result from this uncertainty which may include adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
These factors have raised substantial doubt about the Company’s ability to continue as a going concern. There can be no assurances that the Company will be able to obtain adequate financing or achieve profitability. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
30
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Furniture and equipment as of December 31, 2022 and 2021 is summarized as follows:
|
| December 31,
|
|
| December 31,
|
|
|
| 2022
|
|
| 2021
|
|
Office furniture and fixtures
|
| $
| 66,433
|
|
| $
| 55,369
|
|
Office equipment
|
|
| 148,010
|
|
|
| 137,118
|
|
Vehicles
|
|
| -
|
|
|
| -
|
|
Less: accumulated depreciation
|
|
| (135,880
| )
|
|
| (115,481
| )
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
| $
| 78,563
|
|
| $
| 77,006
|
|
Depreciation expense for the years ended December 31, 2022 and 2021 was $38,818 and $10,916, respectively.
NOTE 5 – INTANGIBLE ASSETS
Software as of December 31, 2022 and 2021 is summarized as follows:
|
| December 31,
|
|
| December 31,
|
|
|
| 2022
|
|
| 2021
|
|
Software
|
| $
| 1,878,759
|
|
| $
| 1,940,614
|
|
Less: accumulated amortization
|
|
| (869,881
| )
|
|
| (714,613
| )
|
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
| $
| 1,008,878
|
|
| $
| 1,226,001
|
|
Amortization expense for the years ended December 31, 2022 and 2021 was $146,284 and $56,705, respectively.
NOTE 6 – GOODWILL
|
|
|
|
|
|
|
|
| December 31,
2022
|
|
| December 31, 2021
|
Goodwill
| $
| 71,664,639
|
|
| $
| 71,664,639
|
Less accumulated impairment losses
|
| -
|
|
|
| -
|
Balance at end of period
| $
| 71,664,639
|
|
| $
| 71,664,639
|
Goodwill has been allocated for impairment testing purposes to the acquisition of the shares of Macao E-Media Development Company Limited by the Company.
The assets were valued using a Fair Market Value basis as defined by The Financial Accounting Standards Board (FASB ASC 820). Liabilities were taken from Macao E-Media Development Company Limited Consolidated Balance Sheet as of September 27, 2021.
NOTE 7 – RIGHT TO USE ASSETS AND LEASE LIABILITY
The Company entered into a two-year lease for office space of approximately 770 square feet in Hong Kong, expiring January 10, 2022, with monthly payments of approximately $4,404 per month.
The Company entered the lease agreement for office and supermarket with MED and its subsidiaries in Macao and Zhuhai, with monthly payments of approximately $28,351 per month.
At lease commencement date, the Company estimated the lease liability and the right of use assets at present value using the Company’s estimated incremental borrowing rate of 8% and determined the initial present value, at inception, of $1,355,043.
31
Right to use assets is summarized below:
|
| December 31, 2022
|
|
| December 31, 2021
|
|
Macao and Zhuhai
| $
| 1,257,014
|
|
| $
| 1,175,932
|
|
Hong Kong
|
| 98,029
|
|
|
| 98,331
|
|
Subtotal
|
| 1,355,043
|
|
|
| 1,274,263
|
|
Less accumulated depreciation
|
| (839,486
| )
|
|
| (687,341
| )
|
Right to use assets, net
| $
| 515,557
|
|
| $
| 586,922
|
|
During the year ended December 31, 2022 and 2021, the Company recorded $433,876 and $169,426 as depreciation on ROU assets; and the Company recorded $46,643 and $15,544 as financial interest to current period operations.
Lease liability is summarized below:
|
| December 31, 2022
|
| December 31, 2021
|
|
Macao and Zhuhai
| $
| 464,927
|
| $
| 586,922
|
|
Hong Kong
|
| 50,630
|
|
| -
|
|
Total lease liability
|
| 515,557
|
|
| 586,922
|
|
Less: short term portion
|
| (347,649
| )
|
| (400,009
| )
|
Long term portion
| $
| 167,908
|
| $
| 186,913
|
|
Maturity analysis under these lease agreements are as follows:
|
| |
|
|
| |
|
Year ended December 31, 2022 and 2021
| $
| 542,699
|
|
| $
| 627,609
|
|
Less: Present value discount
|
| (27,142
| )
|
|
| (40,687
| )
|
Lease liability
| $
| 515,557
|
|
| $
| 586,922
|
|
Lease expense for the year ended December 31, 2022 was comprised of the following:
|
|
| |
|
Operating lease expense
|
| $
| 414,648
|
|
Short-term lease expense
|
|
| 142,517
|
|
|
| $
| 557,165
|
|
Lease expense for the year ended December 31, 2021 was comprised of the following:
|
|
| |
|
Operating lease expense
|
| $
| 176,479
|
|
Short-term lease expense
|
|
| 46,510
|
|
|
| $
| 222,989
|
|
NOTE 8 - LOAN RECEIVABLES
In September 10, 2021, the Company’s subsidiary, Sinoforte Limited entered into a business loan agreement, by and among the company, Gold Gold Gold Limited (“3G”), whereby the Company provide the fund for $1,000,000 to 3G for the business operating use. The loan amount was unsecured, with interest rate 5% p.a. and no fixed term of repayment.
NOTE 9 - INVENTORIES
The Company purchased gold from the platform under its joint venture, Gold Gold Gold Limited. Inventories for gold as of December 31, 2022 was $522. On September 27, 2021, the Company acquired a Macao subsidiary, “MED” and Green Supply Chain Management Company Limited who were trading as mobile platform of ordering and delivery services for restaurants and supermarket respectively and had approximately $108,000 merchandise inventory as of December 31, 2022.
32
NOTE 10 – CASH AND CASH EQUIVALENTS
Cash and cash equivalents from consolidated statements of cash flows as follows:
|
| December 31, 2022
|
|
| December 31, 2021
|
|
Cash at bank and in hand
| $
| 2,677,775
|
|
| $
| 4,920,375
|
|
Overdrafts
|
| (599,978
| )
|
|
| -
|
|
Cash and cash equivalents, net
| $
| 2,077,797
|
|
| $
| 4,920,375
|
|
NOTE 11 – BANK LOANS AND OVERDRAFTS
The bank loans are borrowed by MED and Zhuhai Chengmi Technology Company Limited (“Chengmi”), which are the new subsidiaries during business combinations in September 2021. The banking credit facility from MED dated March 3, 2020 for a maximum principal of $374,672 expiring July 31, 2025 at an interest rate of 4.25%. This loan is secured against the directors of MED and for the use of MED operation due to the outbreak of COVID-19. Another bank loan borrowed by Chengmi with principle of $464,583 and $309,721 and expiring December 2022 and May 2023, respectively, at an interest rate of 4.6% and 4.45% per annum. On June 13, 2022, MED borrowed another loan from Ant Bank (Macao) Limited with principle of $623,239 (equivalent to MOP5,000,000), at an interest rate of 4% per annum with no fixed term of repayment.
Bank loans and overdrafts are summarized below:
|
| December 31, 2022
|
|
| December 31, 2021
|
|
Bank loans
| $
| 1,009,446
|
| $
| 1,047,403
|
|
Bank overdrafts
|
| 599,978
|
|
| -
|
|
Total bank loans and overdrafts
|
| 1,609,424
|
|
| 1,047,403
|
|
Less: short term portion
|
| (892,701
| )
|
| (566,046
| )
|
Long term portion
| $
| 716,723
|
| $
| 481,357
|
|
NOTE 12 – CAPITAL STOCK
The Company is authorized to issue 500,000,000 shares of common stock, $0.01 par value, and 25,000,000 shares of preferred stock, $0.01 par value. As of December 30, 2022 and 2021, there were 263,337,500 shares of the Company’s common stock issued and outstanding, and none of the preferred shares were issued and outstanding.
As of December 31, 2022, Kelton Capital Group Ltd. owned 31,190,500 shares, or 11.84%, of the Company’s common stock, Jiang Haitao owned 46,588,236 shares, or 17.69%, of the Company’s common stock, and Elate Holdings Limited owned 26,000,000 shares, or 9.87%, of the Company’s common stock. Other than Kelton Capital Group Ltd, Jiang Haitao and Elate Holdings Limited, no person owns 5% or more of the Company’s issued and outstanding shares.
NOTE 13 – LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss per common share for the year ended December 31, 2022 and 2021, respectively:
Schedule of Loss Per Share
|
| For the Years Ended December 31,
|
|
|
|
| 2022
|
| 2021
|
|
|
Numerator - basic and diluted
|
|
|
|
|
|
|
|
|
Net loss
|
| $
| (3,766,129)
|
| $
| (967,685)
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding —basic and diluted
|
|
| 263,337,500
|
|
| 184,177,222
|
|
|
Loss per common share — basic and diluted
|
| $
| (0.014)
|
| $
| (0.005)
|
|
|
|
|
|
|
|
|
|
|
|
33
NOTE 14- INCOME TAXES
The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.
For the year ended December 31, 2022, the Company's realized net taxable income which offset existing deferred tax assets relating to net operating losses, was offset further (100%) by the valuation allowance. Other temporary differences are expected to be immaterial. Therefore, there were no expected income taxes, either current or deferred, reflected in the income statement.
At December 31, 2022, the Company has available for U.S. federal income tax purposes a net operating loss carryforward of approximately $6,200,000, expiring within 20 years, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized.
Due to possible significant changes in the Company's ownership, the future use of its existing net operating losses may be limited. Components of deferred tax assets as of December 31, 2022 are as follows. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.
The Company and its subsidiaries file separate income tax returns.
The United States of America
Scientific Energy, Inc. is incorporated in the State of Utah in the U.S., and is subject to a gradual U.S. federal corporate income tax of 21%. The State of Utah does not impose any corporate state income tax. As of December 31, 2022, future net operation losses of approximately $0.10 million are available to offset future operating income through 2040.
British Virgin Islands
Makeliving Limited is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Makeliving Limited are not subjected to tax on income or capital gains.
Hong Kong
Sinoforte Limited and Qwestro Limited are incorporated in Hong Kong and Hong Kong’s profits tax rate is 8.25% for the first HK$2 million of profits of qualifying corporations, and profits above HK$2 million will be taxed at 16.5%. Sinoforte Limited and Qwestro Limited did not earn any income that was derived in Hong Kong for the years ended December 31, 2022 and 2021, and therefore, Sinoforte Limited and Qwestro Limited were not subjected to Hong Kong profits tax.
Macau
Macao E-Media Development Company Limited, Squirrel Logistic Company Limited and Green Supply Chain Management Company Ltd. are exempted to Macau Corporate Income Tax.
People’s Republic of China
Zhuhai Chengmi Technology Company Ltd., Zhuhai Migua Technology Company Ltd. and Guangzhou Chengmi Technology Company Ltd. are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is 25%.
34
At December 31, 2022 and 2021, the significant components of the deferred tax (assets) liabilities are summarized below:
Schedule of Income Taxes
Deferred Tax Assets:
|
| December 31, 2022
|
|
| December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
| $
| (3,822,501)
|
| $
| (988,081)
|
Inventory obsolescence
|
| -
|
|
| -
|
|
|
|
|
|
|
Total deferred tax assets
|
| (3,822,501)
|
|
| (988,081)
|
Valuation allowance
|
| 3,822,501
|
|
| 988,081
|
Net deferred tax assets
| $
| -
|
| $
| -
|
The Company is subject to income tax holidays with respect to its Asian operations, and accordingly has recognized for foreign income taxes.
Rate Reconciliation:
|
| December 31, 2022
|
|
| December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Book losses (worldwide) at federal statutory rate (21%)
| $
| 54,858
|
| $
| 46,826
|
Hong Kong Profit Tax rate (16.5%)
|
| 1,302
|
|
| 12,595
|
PRC Tax rate (25%)
|
| (223,621)
|
|
| (103,045)
|
Change in valuation allowance
|
| 167,461
|
|
| 43,624
|
Net expense (benefit)
| $
| -
|
| $
| -
|
The net deferred tax asset generated by the U.S. loss carry-forward has been fully reserved.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended December 31, 2022 and 2021, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at December 31, 2022 and 2021. Tax years from 2015 through 2022 are open to examination by the taxing authorities.
NOTE 15 - JOINT VENTURE
Gold Gold Gold Limited (“JV”) was created in February 2018. The Company entered into a JV agreement with primary activity of trading of gold. The Company injected $12,839 (HK$100,000) to the JV during the year. The Company shared the operating loss from JV of $12,839 during 2019.
Summarized financial information for joint venture is as follows:
Balance Sheets:
|
| December 31, 2022
|
| December 31, 2021
|
|
Property, plant and equipment, net
|
| $
| 2,586
|
| $
| 3,676
|
|
Other receivables and prepaid
|
|
| 9,238
|
|
| 8,920
|
|
Inventory
|
|
| 1,069,173
|
|
| 4,181,874
|
|
Cash and cash equivalents
|
|
| 187,178
|
|
| 1,379,175
|
|
Total assets
|
|
| 1,268,175
|
|
| 5,573,645
|
|
|
|
|
|
|
|
|
|
Other payable
|
|
| (4,399,049
| )
|
| (4,265,052
| )
|
Customer deposits and other
|
|
| (994,351
| )
|
| (4,885,447
| )
|
Total liabilities
|
|
| (5,393,400
| )
|
| (9,150,499
| )
|
|
|
|
|
|
|
|
|
Net liabilities
|
| $
| (4,125,225
| )
| $
| (3,576,854
| )
|
35
Statement of Operations:
|
| December 31,
|
|
| December 31,
|
|
|
| 2022
|
|
| 2021
|
|
Revenue
| $
| 5,301,008
|
|
| $
| 8,532,963
|
|
Cost of sale
|
| (5,021,470
| )
|
|
| (8,253,515
| )
|
Gross profit
|
| 279,538
|
|
|
| 279,448
|
|
Operating expense
|
| (607,255
| )
|
|
| (695,248
| )
|
Net loss from operations
|
| (327,717
| )
|
|
| (415,800
| )
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest (expense) income, net
|
| (213,583
| )
|
|
| (178,096
| )
|
Net loss
| $
| (541,300
| )
|
| $
| (593,896
| )
|
NOTE 16 - COMMITMENTS AND CONTINGENCIES
Capital commitment
As of December 31, 2022, and 2021, no capital commitment was expected.
Legal Proceeding
As of December 31, 2022, the Company is not aware of any material outstanding claim and litigation against it.
NOTE 17 - SUBSEQUENT EVENTS
In accordance with ASC 855, “Subsequent Events,” the Company has evaluated subsequent events through the date of filing. No material subsequent events were noted.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth the information about our sole director and executive officer:
|
|
|
Name
| Age
| Positions Held
|
|
|
|
Stanley Chan
| 68
| President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
|
Mr. Stanley Chan has served as our Director, Chief Executive Officer, Chief Financial Officer, Secretary, and Chairman of the Company since May 2006. Mr. Chan has more than ten years of experience in import-export business and financial investment.
Significant Employees
There are no significant employees other than our executive officer.
Family Relationships
None of our directors, executive officers, or key employees is related by blood, marriage, or adoption to any other director, executive officer, or other key employees. To our knowledge, there are no arrangements or understanding between any of our officers and any other person, including directors, pursuant to which the officer was selected to serve as an officer.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act, requires officers and directors of our company and persons who beneficially own more than 10% of a registered class of our company’s equity securities to file initial statements of beneficial ownership of common stock (Form 3) and statements of changes in beneficial ownership of common stock (Forms 4 or 5) with the SEC. Officers, directors, and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all such forms they file.
During the fiscal year ended December 31, 2022, all of our director, executive officer or beneficial owner of more than 10% of our common stock were compliance with the Section 16(a) of the Exchange Act.
Committees of the Board of Directors
The current Board is composed of one director. We currently do not have a separate Audit Committee, Nominating, Governance Committee or Compensation Committee; however, we intend to expand the size of our Board of Directors and intend to seek qualified directors to serve on the Board and ultimately form standing Audit, Nominating, Governance and Compensation Committees.
Classification of Directors; Board Vacancies
The holders of a majority of the outstanding shares of the Company’s common stock have approved an amendment to the Company’s Articles of Incorporation which provides for the division of our Board of Directors into three classes, each class consisting, as nearly as possible, of one-third of the total number of directors, with each class having a three-year term. Vacancies on the Board of Directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy shall serve for the remainder of the full term of the class of directors in which the vacancy occurred and until such director’s successor is elected and qualified.
Director and Nominee Qualifications
The Board of Directors is responsible for identifying individuals qualified to become Board members and recommending to the Board director nominees for the next annual meeting of stockholders and candidates to fill vacancies on the Board. Additionally,
38
in selecting nominees for directors, the Board will review candidates recommended by stockholders using the same general criteria as other candidates.
There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. The entire board of directors will assess candidates, whether submitted by management or stockholders, and make recommendations for election or appointment.
Audit Committee Financial Expert
The Company’s board of directors determined that the Company does not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(i) of Regulation S-K, nor do we have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended. The Company believes that, from his business experience in overseeing or assessing the performance of companies, Mr. Stanley Chan is capable of analyzing and evaluating our consolidated financial statements and understanding internal controls and procedures for financial reporting. The Company believes that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not currently warranted. The Company does intend to seek qualified audit committee financial experts.
Director Independence
The Company is presently not required to comply with the director independence requirements of any securities exchange, which requires that a majority of a company's directors be independent. The board of directors of the Company intends to appoint additional members, each of whom will satisfy the director independence guidelines in a manner consistent with the definitions of “independence” set forth in SEC Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Leadership Structure
The Chairman of our Board of Directors, and Chief Executive Officer positions are currently the same person, Mr. Chan. Our Bylaws do not require our Board of Directors to separate the roles of chairman and chief executive officer but provides our Board of Directors with the flexibility to determine whether the two roles should be combined or separated based upon our needs. Our Board of Directors believes the combination of the chairman and the chief executive officer roles is the appropriate structure for our company at this time. Our Board of Directors believes the current leadership structure serves as an aid in the Board of Directors’ oversight of management and it provides us with sound corporate governance practices in the management of our business.
Risk Management
The Board of Directors discharges its responsibilities, and assesses the information provided by our management and the independent auditor, in accordance with its business judgment. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, and management is responsible for conducting business in an ethical and risk mitigating manner. The Board of Directors oversees management in their duty to manage the risk of our company and each of our subsidiaries. Our Board of Directors regularly reviews information provided by management as management works to manage risks in the business. The Board of Directors intends to establish Board Committees to assist the full Board of Directors’ oversight by focusing on risks related to the particular area of concentration of the relevant committee.
Code of Business Conduct and Ethics
The Company has adopted a written Code of Business Conduct and Ethics, which applies to its directors, principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
The Code of Business Conduct and Ethics addresses, among other things, compliance with laws, rules and regulations, conflicts of interest, corporate opportunities, confidentiality, protection and use of company assets, and the reporting process for any illegal or unethical conduct.
Any waiver of the Code of Business Conduct and Ethics may only be made by the Board of Directors of the Company and will be promptly disclosed on a Form 8-K.
Compensation Interlocks and Insider Participation
There were no compensation committee or board interlocks among the members of our Board.
39
Legal Proceedings
Neither we, nor any of our property, are currently subject to any material legal proceedings or other regulatory proceedings, and to our knowledge no such proceedings are contemplated.
Item 11. EXECUTIVE COMPENSATION
Executive Compensation
The following tables set forth the compensation of the Company's executive officers during the last two fiscal years:
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-
Equity
|
|
| Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incentive
|
|
| Deferred
|
|
| All
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
|
| Stock
|
|
| Option
|
|
| Plan
|
|
| Compensation
|
|
| Other
|
|
|
|
|
Principal
|
|
|
| Salary
|
|
| Bonus
|
|
| Awards
|
|
| Awards
|
|
| Compensation
|
|
| Earnings
|
|
| Compensation
|
|
| Total
|
|
Position
|
| Year
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
| ($)
|
|
Stanley Chan
|
| 2022
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
CEO and
|
| 2021
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
|
| -
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no "most highly compensated executive officers" as that term is defined in Item 402(a)(2) of Regulation S-K and there were no additional individuals for whom disclosure would have been made in this table.
Director Compensation
Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. As of the date of this report, no guidelines for the compensation of our non-employee directors have been adopted.
Equity Compensation Plans
The Company has no equity compensation plans at present, and there have been no grants of plan-based awards made to a named executive officer in the last two completed fiscal years under any plan.
Outstanding Equity Awards at Fiscal Year-End
The Company does not have any equity incentive plans. There were no outstanding equity awards at fiscal year ended December 31, 2022, as defined by Item 402(p) of Regulation S-K.
Option Exercises and Stock Vested
We do not have any equity incentive plans. There have been no exercise of stock options, SARs and similar instruments, and no vesting of stock, including restricted stock, restricted stock units and similar instruments, during the last two completed fiscal years for each of the named executive officers.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
We do not have employment agreements in place with our executive officers and directors. There are no contracts, agreements, plans or arrangements, whether written or unwritten, that provides for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company or a change in the named executive officer's responsibilities following a change in control, with respect to each named executive officer.
Pension Benefits
We do not sponsor any qualified or non-qualified pension benefit plans.
40
Nonqualified Deferred Compensation
We do not maintain any non-qualified defined contribution or deferred compensation plans. At this time, we do not have a tax qualified defined contribution 401(k) plan in which all eligible executive officers and employees may participate.
Securities Authorized for Issuance under Equity Compensation Plans
As of the end of the most recently completed fiscal year, there were no compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
Potential Conflicts of Interest of Compensation Consultants
No compensation consultants have ever been hired to advise the Company and its Board of Directors.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set forth certain information as of March 31, 2023, regarding (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director, nominee and executive officer of the Company and (iii) all officers and directors as a group. Percentage of ownership is based on 263,337,500 shares of common stock outstanding on March 31, 2023.
Security Ownership of Certain Beneficial Owners
Title of Class
| Name and Address of
Beneficial Owner
| Amount and Nature of Beneficial Owner (1)
|
Percent of Class
|
|
|
|
|
Common
| Liang Huang (2)
c/o 27 Weldon Street
Jersey City, NJ 07306
|
31,261,920
|
11.87%
|
|
|
|
|
Common
| Jiang Haitao
c/o 27 Weldon Street
Jersey City, NJ 07306
|
46,588,236
|
17.69%
|
|
|
|
|
Common
| Elate Holdings Limited
Unit 1002, 10/F, Euro Trade Centre
13-14 Connaught Road Central and 21-23 Des Voeux Road, Central, Hong Kong
| 26,000,000
| 9.87%
|
Notes:
(1) Beneficial ownership is determined in accordance with Rule 13d-3 promulgated by the Commission under the Securities Exchange Act of 1934 and generally includes voting or investment power with respect to securities. Except as indicated, we believe each holder possesses sole voting and investment power with respect to all of the shares of voting stock owned by that holder, subject to community property laws where applicable. In computing the number of shares beneficially owned by a holder and the percentage ownership of that holder, shares of common stock subject to options or warrants held by that holder that are currently exercisable or are exercisable within 60 days after the date of the table are deemed outstanding. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person or group.
(2) Includes 31,190,500 shares held by Kelton Capital Group Limited.
Security Ownership of Directors and Executive Officers
As of March 31, 2023, no director, nominee and executive officer of the Company owned the security of the Company.
Changes in Control
There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the registrant.
41
Securities Authorized for Issuance under Equity Compensation Plans
As of the end of the most recently completed fiscal year, there were no compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Certain Related Party Transactions During the Last Two Fiscal Years
During the year ended December 31, 2022, there were no transactions, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest:
●
| any director or executive officer of our company;
|
●
| any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;
|
●
| any promoters and control persons; and
|
●
| any member of the immediate family (including spouse, parents, children, siblings and in laws) of any of the foregoing persons.
|
Procedures for Approval of Transactions with Related Persons
The Company does not have a written policy relating to the approval of transactions with related persons, and any such transactions are pre-approved by our Board of Directors in accordance with applicable law. Following the Board of Director’s review of the potential transaction, it will determine whether these transactions are in, or not inconsistent with, the best interests of the Company and its stockholders, taking into consideration whether they are on terms no less favorable to the Company than those available with other parties and the related person’s interest in the transaction.
Parents
Not Applicable.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by, Centurion ZD CPA & Co., our independent registered public accounting firms, for the periods indicated. We did not pay any other fees to our independent registered public accounting firm during the periods indicated below.
|
|
|
|
|
|
|
Fee Category
|
| 2022
|
| 2021
|
Audit Fees
|
| $
| 124,000
|
| $
| 116,000
|
Audit-Related Fees
|
|
| -
|
|
| -
|
Tax Fees
|
|
| -
|
|
| -
|
|
|
|
|
|
|
|
Total Fees
|
| $
| 124,000
|
| $
| 116,000
|
|
|
|
|
|
|
|
(1) Audit fees represent fees for professional services provided in connection with the audit of our consolidated financial statements and review of our quarterly consolidated financial statements included in our Form 10-Q.
(2) Audit related fees. None.
(3) Tax fees. Tax return preparation.
(4) All other fees. None.
(5) Pre-Approval Policies
42
It is the policy of the Board of Directors of the Company to approve the engagement to render audit or non-audit services before the accountant is engaged by the Company.